Clay Company Has Projected Sales and Production in Units for the Second

question 107

Essay

Clay Company has projected sales and production in units for the second quarter of the coming year as follows:

Cash-related production costs are budgeted at $5 per unit produced. Of these production costs, 40% are paid in the month in which they are incurred and the balance in the following month. Selling and administrative expenses will amount to $100,000 per month. The accounts payable balance on March 31 totals $190,000, which will be paid in April.

All units are sold on account for $14 each. Cash collections from sales are budgeted at 60% in the month of sale, 30% in the month following the month of sale, and the remaining 10% in the second month following the month of sale. Accounts receivable on April 1 totalled $500,000 ($90,000 from February's sales and the remainder from March).

Required:

a) Prepare a schedule for each month showing budgeted cash disbursements for Clay Company.
b) Prepare a schedule for each month showing budgeted cash receipts for Clay Company.

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Definitions:

Nature and Nurture

The debate regarding the relative contributions of genetic inheritance (nature) and environmental factors (nurture) to human development.

Heredity

The passing on of physical or mental characteristics genetically from one generation to another.

Genes and Chromosomes

Elements of heredity with genes being the molecular units of inheritance on chromosomes, which are long strands of DNA containing a sequence of genes.

Psychologically Disordered

Exhibiting behavior or patterns of thought that significantly deviate from societal norms or expectations, typically leading to distress or impairment.